Should we take a mortgage payment holiday?

polfers32

Dear all

My partner and I have a mortgage with Nationwide. I recently qualified as a teacher after a years training and start my new job next month. However, I haven't been working over the past 2 months and now I have used up all my money which means I cannot pay my mortgage or loan repayments next month. I have spoken with Nationwide and we are eligible for a mortgage holiday. I thought it would be a good idea as it will give me time to get back on my feet for when i start to earn a salary again. The alternative seems to be defaulting on my mortgage and loan repayments as well as not being able to get by in the first month.

all responses very welcome.

Emma

dunstonh

Given the alternative of not paying the mortgage then it makes sense. However, you need to be aware that this is basically authorised arrears. Currently that doesn't do you much, if any damage, when looking at future borrowing but there have been proposals to start grading mortgage lending (at corporate level) and books with a high proportion of payment holidays are expected to receive a lower grade. In turn, lenders would likely start treating those with payment holidays more negatively than they do at present. That hasn't occurred yet but it is something currently in the works and it may go that way or not but it is something you need to be aware of just in case.

You should treat the holiday as a last resort action and if you are at that last resort then you are best taking it.

polfers32

Thanks dunstonh

I feel a bit 'bad' and reluctant about taking a morgage payment holiday, amost like it's sticking my head in the sand but as you said it's a better alternative than not paying. We haven't decided how long to take it for, is 6-12 months too long - my partner is considering using the opportunity to pay off his overdraft.

Thanks for your advice, it's very much appreciated!

Emma

_Andy_

polfers32 wrote: »

Thanks dunstonh

We haven't decided how long to take it for, is 6-12 months too

Emma

Surely you already have your answer as Nationwide have said 3 months?

polfers32

They said 3 months minimum but we can increase it up to 12 months - not sure if doing it for 6-12 months is a bit excessive though

_Andy_

Ah I see. Well I'd suggest keeping it to the minimum possible then.

geoffky

next thing to do is a out goings and incoming sheet and be vigilant with your costs..

Len_Beach

Very easy to apply for. Much easier to take a 12 month holiday & come out of it early than take a 3 month holiday & try to extend it.

The interest rolls up each day & is added to your capital @ the end of the holiday so your payments will increase unless you extend the term but the money you save, if used wisely could be beneficial.

jamesd

If the overdraft is at a higher interest rate than the mortgage interest rate, then taking the longer repayment holiday to clear the overdraft sounds like a good idea. He should plan to make mortgage overpayments of the overdraft amount plus interest allowance into the mortgage so that there won't be any extra borrowing at the end.

He could also consider a personal loan for the overdraft amount. That will probably be more expensive than using the mortgage but cheaper than the overdraft.